PROCEDURE FOR LAUNCHING PROSECUTION

After identification of potential cases for prosecution by the CPC – TDS in case of mandatory processing or otherwise, It should be entered in the ‘Prosecution register’ maintained in Form–C and To be reported to the CIT(TDS) who shall also maintain the prosecution register in Form–D till a specific module in CPC-TDS is made functional for having control on prosecution proceedings, the entries may be made in manual register Procedure for launching prosecution……. 2

(a) Details of the company/ firm/ individual Name of the company/ firm/individual, Present address, PAN, TAN (b) Details of its directors/ partners/ proprietor etc Name of Directors/ Partners/ Proprietor as applicable for the relevant year Date of birth PAN & residential address (c) Accounts of the deductor for the relevant year showing late payments. (d) Copies of the TDS statement filed by assessee deductor. (e) Copies of challans of late deposit of TDS by the assessee deductor. Information/documents regarding the deductor may be collected by the AO(TDS) once the case is identified for processing : ……. Contd…. 3

(f) Copies of the intimations showing late payment interest for all the quarters of the relevant assessment year, if it is available. (g) Copies of Audit report, if they show default. (h) While collecting above information, AO(TDS) may also collect other details that may help the CIT(TDS) take a considered decision as also assist subsequent compounding proceedings (if any) viz. (a) whether the default was only in one year and no defaults took place later, (b) whether the deductor has himself rectified the mistake and deposited the tax along with interest prior to issue of notice by the department, (c) whether the same offence has been compounded earlier and if yes, how many time etc. Information/documents regarding the deductor may be collected by the AO(TDS) once the case is identified for processing : ……. Contd…. 4

The AO(TDS) after collecting the above information/documents shall issue show cause notices to the person responsible for deduction (directors/principal officers/partners/members/ karta). It may be ensured that the reply is furnished within 30 days of the issue of the show cause notice. The AO(TDS) shall examine the reasons/reply for non- compliance and will prepare the proposal in Form ‘F’ (as prescribed in Prosecution Manual) and send it to the CIT(TDS) through proper channel. Procedure ……. 5

An entry can be made by the AO(TDS) in the Form ‘C’ (manual register or the specific module for prosecution as and when developed on TRACES) as soon as the proposal is moved. The CIT(TDS) is the competent authority to accord sanction u/s 279(1). The assessee deductor can at any stage of the proceedings, file a compounding application before the Pr. Chief Commissioner of Income-tax/Chief Commissioner of Income-tax. Instruction vide F.No.285/35/2013-IT(Inv.V)/108 dt The CIT(TDS) after according sanction u/s 279(1) shall send back the records to the authority seeking sanction with sanction order in duplicate, one for filing in the Court with complaint and other for the record. Procedure ……. Contd…. 6

The AO(TDS) shall, after entering receipt of the sanction order in the prosecution register maintained by him, ensure that the complaint is launched in the competent Court having jurisdiction over the place where the offence is committed. The CIT(TDS) & the AO(TDS) shall both make an entry in the respective registers maintained manually or in the utility as and when available in TRACES. Procedure ……. Contd…. Note: I f any such prosecutable offence comes to light during the proceedings before the appellate authorities, revision authorities or any other proceedings, same shall also be treated at par with other prosecutable cases as enumerated under Chapter-XVII of the Income Tax Act, 1961 and action shall be initiated in accordance with procedure as laid vide this SOP. 7

I. Role of Pr. CCIT/CCIT(TDS): a. Interacting with the CIT(TDS) on a regular basis monitoring the fluctuation in the TDS/TCS collection. b. Apprising the Zonal Member/Member(R) of the fluctuations and reasons thereof alongwith Action Taken or proposed through monthly D.O. by 10th of the following month and a copy of the D.O. shall also be sent to Principal DGIT(Admn.) II. Role of CIT (TDS): a. Discussing top cases with substantial fall compared to previous years with the Range Head. b. Analysing the reasons for fall in the TDS/TCS collection in the top cases and also examining the same section-wise. c. Suggesting follow-up action like spot verification/survey etc. d. Incorporating the action taken, in monthly DO. Roles of different TDS Authorities in addressing the issue of top deductors paying less/no tax with respect to previous F.Y.s 8

III. Role of Addl. CIT(TDS): a. Examining the cases with substantial fall compared to previous years and also suggesting action on potential cases. b. Analysing the overall reasons for lower deduction or collection and also TDS/TCS section-wise analysis of negative trend. c. Taking follow-up action like spot verification/survey etc. d. Incorporating the action taken in monthly DO. IV. Role of AO - TDS: a. Issuing letters to all TAN holders with substantial fall compared to previous years. b. Asking the Inspector to follow up these cases. c. Examining the negative trend in TDS/TCS collection section-wise. d. Getting market information about business prospects of the TAN holder. e. Discussing all such cases with the Range head and also suggest corrective measures, if necessary. Roles of different TDS Authorities in addressing the issue….. Contd… 9

V. Role of CIT(TDS-CPC), Ghaziabad: a. Providing list of top deductors with 3years comparative chart including nature of the payment to each AO - TDS and such report should be generated on real time data. b. Providing copy of such information to jurisdictional Pr. CCIT/CCIT(TDS) as well. c. Analysing and updating sector-wise TDS growth in the other CCIT charges. Roles of different TDS Authorities in addressing the issue….. Contd… 10